Controversial plans for a major jam-busting road improvement scheme and tunnel at ancient Stonehenge - a world heritage site - have been axed by the Government on grounds of cost.

Ministers said the cost of the controversial 1.3 mile bored tunnel scheme on Salisbury Plain, Wiltshire, had soared from £223 million to £540 million.

The decision to scrap the project has sparked a major row between "green" groups who welcomed the decision - and motoring groups who backed a by-pass.

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But Transport Minister Tom Harris announced yesterday that allocating such sums "cannot be justified and would not represent best use of taxpayers' money".

This was despite evidence that the tunnel scheme was deemed the best alternative scheme for an area which suffers major traffic hold-ups.

The Government is still committed to improving visitor facilities at Stonehenge, but any traffic improvements will now be small scale.

The decision was welcomed by the Save Stonehenge organisation which said: "Christmas has come early for Stonehenge".

But the AA and RAC said it was a "bitter disappointment" condemning Stonehenge to "further environmental damage" and motorists to "years of misery" and congestion at a legendary bottleneck.

In a Parliamentary Written Answer, Mr Harris said a review of the Stonehenge improvement plan - which had been the subject of a public inquiry - had identified a short-list of possible options, including routes to the north and south of Stonehenge.

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He said the Government had concluded that "due to significant environmental constraints across the whole of the World Heritage Site, there are no acceptable alternatives to the 2.1km bored tunnel scheme."

But with a sting in the tail he added: "However, when set against our wider objectives and priorities, we have concluded that allocating more than £500 million for the implementation of this scheme cannot be justified and would not represent best use of taxpayers' money."

Mr Harris said the Government recognised the importance of the A303 Stonehenge improvement scheme and accepted that the announcement would come as a considerable disappointment for the project's supporters.

He said the Highways Agency would investigate possible small-scale improvements to the A303.

Mr Harris said the Department for Transport would work with the Department for Culture, Media and Sport and English Heritage on a review of the site - including alternative options for the development of new visitor facilities at Stonehenge.

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This will include examining the case for closing the junction of the A344 with the A303 as part of the investigation of options for improving the setting of Stonehenge.

Campaigners for "Save Stonehenge" said that only a 1.3-mile section of the proposed 7.7-mile route would have been underground and that the decision was "the only sensible outcome as a massive road-building project was always the wrong solution in such a sensitive landscape".

Mr Woodford said: "Christmas has come early for Stonehenge. No-one with any sense wanted a tunnel, a flyover, a dual carriageway, and two whacking great interchanges here.

"It's just not acceptable to build 1950s-style motorways in places like this anymore."

David Holmes, chairman of the RAC Foundation, said: "A price should not be put on our heritage in this way.

"We are extremely disappointed that the Government has condemned Stonehenge to further environmental damage and the A303 to chronic congestion due to their failure to act.

"Our report, Roads And Reality, clearly states that the problem of congestion will not go away. Years of misery lie ahead."

Paul Watters, head of AA Public Affairs said: "We are bitterly disappointed by the Government's decision.

"Many motorists will think that their motoring taxes are going nowhere and, if ever there was a deserving case for an environmental spend on transport, this was the one."

But Denise Carlo of the Campaign for Better Transport (formerly Transport 2000), said: "We've been saying for years that the plan to build a tunnel and road through the Stonehenge World Heritage Site would be an environmental and financial disaster.

"We're glad the Government has seen sense to drop this brutal scheme."

Chris Woodford of the Stonehenge Alliance said the proposed tunnel would have protected only the central part of the site, while the cuttings and dual carriageways emerging from it would have left "a deeply scarred archaeological landscape, blighted by secure fences and traffic noise".